Abstract

This article presents a detailed Best Buy SWOT analysis. The internal and external analysis highlights key strengths, weaknesses, opportunities, and threats that shape the Best Buy’s overall business environment. The article provides insights into US consumer electronics market, and discusses its strategic implications for Best Buy and other competitors. The article is a useful piece of information for strategic management students, researchers, educators, and anyone interested in exploring the consumer electronic industry dynamics.

1. Introduction

In this article, we conduct detailed SWOT analysis of Best Buy. The company is currently struggling with various internal and external challenges. Through Best Buy SWOT analysis, we highlight the key factors that directly influence the business success.

2. Company overview

Company name	Best Buy
Founding year	1966
Headquarters	Richfield, USA
CEO	Corie Barry
Industry	Retail (consumer electronics)
Number of employees	Around 102,000
Number of countries	USA, Canada, and Mexico
Revenue 2022	$47.92 billion
Market capitalization 2023	$16.42 billion

3. Best Buy SWOT Analysis

First, we conduct internal environmental analysis to highlight Best Buy strengths and weaknesses:

3.1. Best Buy Strengths

3.1.1. Strong position in home market

Best Buy holds dominant position in the USA. An extensive portfolio of private-label Best Buy brands contributes to brand’s strong market presence.

In 2021, Best Buy experienced 9.7% impressive revenue growth compared to last year. With market capitalization of $16.42 billion (2023), Best Buy is capable of handling the internal and external challenges.

3.1.2. Wide distribution network

Best Buy has a total of 1,138 stores operating in the US, Mexico and Canada. Besides that, it also has strong online presence, which makes Best-Buy a one-stop shop for all.

3.1.3. Growing ecommerce presence

Best Buy’s market share in global ecommerce industry is growing. In US electronics and media market, Best Buy achieved 4^th rank with around $5,000 million revenue in 2022. It accounts for around 5% to 10% of net ecommerce sales in this category.

3.1.4. Efficient Omni-channel strategy

Forbes considered Best Buy’s Omni-channel strategy efficient. The integration of online and offline options provides a seamless access to the products and services across multiple channels.

3.1.5. Strong presence in ecommerce computer electronics segment

With a wide product variety, Best Buy ensures strong presence in the computer and consumer electronics, which is the fastest growing sector in USA:

Source: Oberlo

3.1.6. Low operational expenses

Through efficient cost management, Best Buy has successfully reduced its operating expenses by 7.62% in 2023 compared to last year. It has also reduced the interest expense from $72 million in 2017 to $64 million in 2020, reflecting the cost management efficiency.

3.1.7. Successful strategic acquisitions

Best Buy has made a series of successful strategic acquisitions that contribute to the brand success:

Notable acquisitions

3.1.8. Expert consultation

Best Buy offers expert consultation services to customers who need help in making well-informed electronics purchase decision.

3.1.9. Promotional events

Best Buy 48 hour sales event captured everyone’s attention in 2022. The price slashing event gave tough competition to Amazon who also arranged the sales event on the same day- CNET reports.

3.2. Best Buy Weaknesses

Here are some key weaknesses of best buy:

3.2.1. Nominal share in ecommerce market

Despite growing online presence, Best Buy still has limited share (1.8%) in US ecommerce market:

Source: Start-up Talky

3.2.2. Falling revenue

Best Buy’s total revenue is falling in the USA since 2021, as shown in following graph:

Source: Statista

In 2022, Best Buy total revenue fell by 8.42% compared to last year, and revenue is expected to fall further by 5.86% by the end of 2023.

3.2.3. Lack of innovation

Best Buy marketing strategy lacks innovation (Best Buy Marketing strategy<Best Buy versus Amazon) and differentiation, as many customers believe that Best Buy’s offering look too much like Amazon- Forbes.

3.2.4. Customer dissatisfaction

Customers’ dissatisfaction with Best Buy’s product quality reflects into following customer sentiment analysis:

Source: Comparably

3.2.5. Poor customer service

Best Buy is often criticized for poor customer service, which reflects into following ratings:

Best Buy customer service ratings

Rating agency	Score
Trust Pilot	1.3 out of 5
Review.io	1.4 out of 5
Site Jabber.com	3.5 out of 5

3.2.6. Failure in China and Europe

Best Buy failed in China, and is failing in the European market as well, resulting into closure of physical stores in both regions.

3.2.7. Weak competitive positioning

While Best Buy claims to charge competitive prices, it struggles competing with Amazon on pricing. Click here (Best-Buy SWOT< Best Buy competitor analysis) to view a price-based comparison of Best Buy, Amazon, and other key players.

3.2.8. Over reliance on the electronics segment

Best Buy excessively depends on the electronics segment, which increases its vulnerability to the market volatility.

3.2.9. Extensive layoffs

In 2023, Best Buy laid off hundreds of store workers as sales of consumer electronics slowed down, and consumers began preferring online shopping.

3.3. Best Buy Opportunities

Best buy industry analysis highlights some key opportunities and threats, as discussed below:

3.3.1. Expansion in emerging markets

Global consumer electronic market size will grow from $724 billion (2021) to $1,131 billion (2030):

Source: Precedence Research

Most of this growth comes from the emerging economies. Best Buy can expand outside USA, and enter in Middle East, India and other emerging economies with promising growth potential.

3.3.2. Strategic acquisitions

Best Buy has a history of making successful acquisition decisions. By leveraging this strength, Best Buy can enter in the emerging markets.

3.3.3. Expand online presence

Considering the consumers’ growing interest in online shopping, Best Buy should gradually shift its focus from physical to online stores.

3.3.4. Augmented and virtual reality

Consumers’ preferences for AR/VR experience while doing online shopping are increasing:

Source: Business Wire

Best Buy can set the clear differentiation basis in ecommerce sector by investing on augmented and virtual reality technologies.

3.3.5. Expand presence in healthcare segment

Global elderly care market will account for around $2,358 billion by 2029:

Source: Data Bridge Market Research

Best Buy should expand the presence in elderly care tech segment to fuel the growth. 

3.3.6. Expansion in lifestyle segment

Following graph shows the forecasted growth in the consumer health and wellness segment:

Source: Precedence Research

Expansion in lifestyle segment can enable the Best Buy to tap into consumers’ rising interest in health and wellness.

3.3.7. Invest on smart homes

US smart home market will experience 22 percent growth from 2020 to 2030:

Source:  Grandview research

Best Buy should focus on this particular segment to capture the double digit growth.

3.4. Best Buy Threats

3.4.1. Changing shopping trends

As consumers’ preferences for online shopping are growing, it is threatening Best Buy’s offline presence, as brand has invested extensively on the physical infrastructure.

3.4.2. Rising inflation

Rising inflation is affecting the consumers’ purchasing power, compelling Best Buy to reduce its prices.

3.4.3. Intense competition

Intense competition from Amazon (Best Buy marketing strategy< Best Buy vs. Amazon), as well as from competitors like Walmart and Target, is saturating the market, and thinning the profit margins of existing players.

3.4.4. Counterfeit threat

Best Buy heavily depends on the consumer electronics segment. This segment is struggling with the counterfeiters. In 2019, US authorities seized counterfeit goods worth $1.5 billion:

Source: Statista

3.4.5. Labour strikes

The threat of labour strikes is increasing in the USA, and Best Buy is not immune to this threat:

The table shows a visible increase in the labor strikes from 2021 to 2022.

The above graph shows that the common reason behind the labor strikes is ‘pay raise’, followed by healthcare and retirement benefits.

Click here to read how Walmart is struggling with a similar issue

4. Recommendations

• Strengthen the presence in ecommerce segment to tap into evolving online shopping trends
• Optimize the Omni-channel strategy to offer a truly seamless experience
• Invest in customer service to avoid customer dissatisfaction
• Reduce the over-dependence on the consumer electronics segment by diversifying the portfolio
• Integrate innovation in marketing strategies to set clear differentiation basis
• Expand globally by entering in the emerging economies
• Expand into healthcare and lifestyle segments to fuel the growth
• Consider strategic acquisition option while entering in new markets

5. Conclusion

To conclude, Best Buy has strong presence in USA, and can utilize its efficient Omni-channel strategy to handle the diversification challenges. The company’s survival largely depends on its ability to continuously innovate and adapt according to changing customer needs.

Click here to know about Best Buy Marketing strategy

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Best Buy operating Expenses 2010-2023 | BBY. (n.d.-b). MacroTrends.

Team, T. (2020b, June 1). Why Is Best Buy’s Stock Up Over 90% Since 2017, Despite Only A Small Revenue Jump? Forbes.

Oram, A. (2022, October 12). Best Buy’s 48-Hour sale: Tracking the top deals until midnight. CNET.

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Statista. (2023, March 22). Online revenue of Best Buy 2018-2023.

Best Buy (BBY) – revenue. (n.d.).

Walton, C. (2022, December 9). How Best Buy Beats ‘Amazon Showroom’ Expectations With Convenience And Innovation. Forbes.

Trustpilot. (2023, October 3). Best Buy Reviews.

Best Buy Reviews – Read 1,196 genuine customer reviews | www.bestbuy.com. (2023, September 22). reviews.io.

Best Buy. (2023, September 20). Best Buy Reviews – 3.3 stars.

Groth, A. (2011, November 6). Best Buy’s Overseas Strategy Is Failing In Europe And China. Business Insider.

Groth, A. (2011b, November 6). Best Buy’s Overseas Strategy Is Failing In Europe And China. Business Insider.

Repko, M. (2023, April 14). Best Buy lays off hundreds of store employees as shopping trends shift. CNBC.

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Elderly Care market Size, share, Opportunity & Industry Challenges by 2029. (n.d.). Data Bridge Market Research, https://www.databridgemarketresearch.com, All Right Reserved 2023.

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